Solar panels could produce electricity at the same price as coal- and natural gas-burning power plants by the end of this decade if countries direct resources at this rapidly advancing corner of the energy industry, according to the Paris-based International Energy Agency.

IEA, composed mostly of European nations and the United States, found in twin studies released yesterday that solar photovoltaic (PV) and concentrated solar power (CSP) together could account for about 22 percent of global electricity production by 2050 under the right conditions.

Today, solar power meets a tiny fraction of the world's electricity needs, but that could change in the next decade, IEA Executive Director Nobuo Tanaka said at a conference in Valencia, Spain. "Long-term-oriented, predictable solar-specific incentives are needed to sustain early deployment and bring both technologies to competitiveness in the most suitable locations and times."

Countries such as Japan, Germany, Spain and the United States and other potentially major markets should focus on creating more incentives that can foster technology advancements, urged Tanaka and the IEA report. Building better solar panels that drive down the upfront cost of a roof installation and the cost of erecting big solar arrays to feed electric utilities are major challenges for the industry.

Solar panel manufacturers and service companies in the solar power business have increased in numbers and strengthened their balance sheets in recent years. U.S. government support in the form of loan guarantees and grants out of the Department of Energy also are helping certain corners of the sector.

In Europe, a rapid expansion of residential and commercial solar power use in the past five years stimulated the global industry. Last year, however, solar ran up against political scrutiny of lavish public subsidies. That has put the brakes on the expansion this year.

To navigate the turbulence, which IEA sees as a short-term blip, and to compete with China's heavily subsidized manufacturers, analysts expect to see more consolidation in the industry.

Last Friday, DOE also said it would distribute a $62 million grant to a handful of companies researching and developing concentrated solar power projects for electric utilities. CSP uses mirrors to collect and focus sunlight on a surface to produce steam for electric power generation.

"This funding will support improvements in CSP systems, components and thermal energy storage to accelerate the market-readiness of this renewable energy technology," DOE said in announcing its financial injection.

By 2020, IEA expects photovoltaic technology fitted on residential and commercial buildings to reach "grid parity," or the point at which solar power is consistently cost-competitive with conventional fossil fuels and nuclear power. "PV will become competitive at utility-scale in the sunniest regions by 2030 and provide 5% of global electricity," according to an IEA summary of its report.

"As PV matures into a mainstream technology, grid integration and management and energy storage become key issues," it continues. "The PV industry, grid operators and utilities will need to develop new technologies and strategies to integrate large amounts of PV into flexible, efficient and smart grids. By 2050, PV could provide more than 11% of global electricity."

In the report, IEA says it expects concentrated solar power to become competitive for peak and mid-peak loads by 2020 in the sunniest places. This means it could start competing with natural gas in the United States, where gas is deployed by power generators to satisfy peak electricity demand.

Natural gas has become a thorn in the side of renewable energy companies. Gas prices have remained low for the past 18 months, reflecting increased onshore gas supply, and it is grabbing more power generation away from both coal and, to some lesser degree, wind and solar.

Thermal storage will help speed development of CSP, which can produce power throughout the day and could, by 2030, meet the substantial needs of baseload power in the United States, Europe, China and India.

"North America will be the largest producer of CSP electricity, followed by North Africa and India," says the report. "North Africa would most likely export about half its production to Europe, the second largest consumer."